“Dear Michael,
Two lines of debt, but both carried on personal line of credit. 1st is personal expense’s (unsecured about $60k), the other is business debt (self employeed unsecured, about $30k). Interest rates are high and dragging the pay off. The pass 48months, have paid $128,000.00 in CC payments, to knock down $27,000.00 on balance owed. Can not continue this. I have the means to pay $2,700.00 per month for just this. but can’t pull a debt loan, because debt/income ratio, and extended.
Looking for options to get pass this 21% intrest rate, or any refinance program to assist. Is debt settlement a real option without to much damage to credit rating. Will be sending child to college in 5 yrs, so need a credible resolution.
Bill”
Hi Bill,
I would recommend you fully investigate two options:
Debt Management Plan – Connecting with an AACC member who offers a DMP will likely afford you the ability to reduce your interest rates so that more of your money is going to pay down the principal balance. A DMP can last 4 to 5 years. Given the information you provided, I estimate your monthly payment in a DMP will hover somewhere around $2,250.00. This would be below what you stated you have available to pay down the 2 debts. When planning for the potential need to qualify for plus loans or cosigning for student loans, the DMP option is in line with your ability to get approved.
Debt Settlement – This option should be viewed as a rip the band-aid off approach to your debt. It is an aggressive method for knocking down debt when your alternative is bankruptcy. I don’t know that you are at that point unless you first determine you cannot do a DMP. Before I would be able to tell you what you are up against and whether or not this would be a good path for you, I have some questions:
Who are the accounts with?
What state do you live in?
What other revolving accounts do you have open and what are the balances?
These questions are just a start. If you can answer them in the comment section below I will be able to respond with a rough estimate of funds you will need and the timing you need to be aware of to keep your risk low. Given the 5 year time frame you mentioned, I would not expect debt settlement to hinder your ability to qualify for plus loans or other student loan products.
Bankruptcy is an option, but given the cash flow you mentioned, I suspect this will not be the path you would take unless your situation were to deteriorate. I would want to know if you have underwater real estate or other issues where bankruptcy would make strategic sense. If the only areas of concern are the 2 lines you mention, I doubt bankruptcy would be a good fit.
Please answer my questions above in the comments below.
Michael Bovee has worked with financially challenged consumers for the past 17 years and is a recognized expert in his field. Michael founded Consumer Recovery Network (CRN) in 2006. CRN offers debt settlement services and educational resources nationwide. He has served as its president since 2006.
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